SEC's Walters:Fair value accounting is crisis 'whipping boy'

WASHINGTON (MarketWatch) - Fair value accounting has unfairly become the "whipping boy" for the financial crisis, said Elisse Walters, a commissioner of the Securities and Exchange Commission. There is actually a fair amount of consensus that fair-value accounting, also known as mark-to-market, accurately portrays a company's financial condition, she said. Critics argue that the accounting treatment doesn't work in illiquid markets, and this has hurt banks in the current crisis. But bank regulators already have flexibility to apply the rules, Walters said. The S.E.C. commissioner said that she favors a "complete" merger of the S.E.C. and the Commodity Futures Trading Commission. Neither agency should be swallowed up, she said. Whatever structure is put in place should give both agencies influence, Walters said.

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